"The bigger they are, the harder they fall." It's the worst nightmare of every investor in today's market -- buying a hot stock just before it takes a nosedive.

Every day, Nasdaq.com publishes a list of stocks whose shares have just hit new 52-week highs. And every day, investors read the list and tremble -- some with greed; others with terror. On our Motley Fool CAPS investing community, these top stocks usually enjoy favorable ratings, since everyone loves a winner. But what should you do when some of CAPS' smartest investors pan one of these hot stocks?

For starters, consider using the "52-week high" list as a starting point for further research. Stocks can rise for many reasons, but a little help from Motley Fool CAPS can make it easier to figure out how worthy those reasons are. Let's see what the 96,000-plus stock gurus (and counting) in CAPS have to say about the list's latest contenders:


One Year Ago Today

Currently Fetching

CAPS Rating (out of 5)

Alcon (NYSE: ACL)




Continental Resources  (NYSE: CLR)




Lumber Liquidators (NYSE: LL)




Capstone Turbine  (Nasdaq: CPST)




MiddleBrook Pharmaceuticals (Nasdaq: MBRK)




*Since IPO.
Companies are selected from the "NASDAQ 52 Week High" list published on Nasdaq.com on the Saturday following the close of trading last week. One-year-ago and current pricing from Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Everybody loves a winner
When stocks soar on the wings of success, bears become rare. So it's not surprising to see that most of the stocks on this week's list rate average or better. Continental Resources has an above-average rating because it's benefiting from the boom in energy prices. And we know that Novartis (NYSE: NVS) wants to buy Alcon, so no mystery there, either. But what's this -- a 52-week-high-hitter getting panned?

Yes, indeed. Its outperformance notwithstanding, MiddleBrook Pharmaceuticals appears to be unpopular among our CAPS investors. But why?

Build a bear, anyone?
Over on CAPS, 52 players have rated MiddleBrook, nine of them unfavorably. However, only two of the bears have chimed in with pitches explaining their positions -- and neither one is very helpful. One pitch contains an inscrutable statement about analyst price targets. The other is an 18-month-old prognostication about the state of MiddleBrook's finances.

In short, if we want to know why MiddleBrook is a sell, we're going to have to do much of the legwork ourselves. Fortunately, you don't need to walk very far to discover the problems with this stock.

Here's a quick summary. Two factors seem to be driving MiddleBrook's growth. First, in January, the FDA approved the company's Moxatag drug for the treatment of strep throat. Second, a month later, management announced that it had hired Morgan Stanley (NYSE: MS) to help it explore "strategic alternatives," which is often Street-speak code for "selling the company at a premium."

Problem is, if MiddleBrook doesn't see an immediate rush of cash flow from its new drug, or if it doesn't secure a sweet sale, it could be in real trouble. At last report, the company had less than $2 million in cash in the bank. However, it's burning through cash at the rate of $36 million per year.

Leave your calculators in your book bags. The upshot is that this company has only enough cash to keep itself in business for the short run -- so it's hardly in a strong negotiating position if it chooses to sell. What's more, to keep itself liquid pending sales negotiations, MiddleBrook will almost certainly need to take on debt or issue additional stock -- and dilute existing shareholders in the process. This stock is likely to fall sooner rather than later.

Time to chime in
That's just my read on the situation. Surely, someone out there knows more about MiddleBrook Pharmaceuticals than I. If you do, head to Motley Fool CAPS and tell us what you think about the company and its prospects.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

Fool contributor Rich Smith owns no shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's ranked No. 1,016 out of more than 96,000 players. The Fool has a disclosure policy.